GOOD FRIDAY MORNING - Happy Festivus (for the rest of us) and welcome to the final M.M. of the year. We are built for speed to get you on the road to Grandma’s house (or wherever) as quickly as possible. Meet you back here when actual voting (!) starts in Iowa. Or see you on the Twitter device in the meantime.

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KENYON REUNION - M.M. will be on “NOW with Alex Wagner” on MSNBC for the noon hour today alongside the estimable Phil Musser, a top GOP consultant and former leading advisor to Minnesota governor Tim Pawlenty’s presidential campaign. Phil is also a fellow Kenyon College Class of 1994 grad and M.M.’s way-back-in-the-day D.C. roommate.

M.M. FLASHBACK - From Wednesday’s column: “The bitter and Grinchy partisan warfare may not end today but M.M. guesses it does by Thursday, especially if more polls roll in showing Dems winning the issue by large margins.” ... This ends the gratuitous “We Told You So” portion of today’s column.

LAUGH LINES - From Letterman last night noting that President Obama bought his dog a new flea collar this week: “Newt Gingrich took his dog to Tiffany and bought him a new diamond muzzle.” Rim shot.

DRIVING THE DAY - Looks pretty solid that no GOP frosh will sing out to block unanimous consent this morning, bringing this whole bizarre kabuki to a close. ... But as someone once told us, you never know for sure until sine die (figuratively in this case, since no one actually adjourns any more). More on this below ... Data include durable goods, expected to rise 2.2 percent, mainly on aircraft; personal income and spending, both expected to grow 0.3 percent; and new home sales, expected to rise to 313K.

LAST QUESTION: FROSH ON BOARD? - POLITICO’s Marin Cogan: “Will the House freshmen comply? That’s the open question looming over the 11th hour deal to extend the payroll tax holiday by two months ... At least two House freshmen left open the possibility that they would object to the unanimous consent to extend the tax holiday by two months while congressional conferees work out a year-long deal. Alabama freshman Rep. Mo Brooks, who voted against the initial year-long deal passed by House Republicans, said he was ‘not yet sure,’ whether he’d protest the deal. Protesting would require the House to reconvene for a roll call vote. ...

“Pennsylvania freshman Rep. Mike Kelly told CNN’s John King Thursday night, ‘I’m not so sure I’m not going to do that,’ when asked if he might drive to Washington to protest the unanimous consent agreement. Under the plan, the House will move to approve the two-month deal without requiring all of its lawmakers to return to Washington. It will pass the Senate automatically after it passes the House. GOP leaders secured promises from Democratic leaders that they would appoint conferees to hash out a year-long deal.” http://bit.ly/vEFl4V

HOW IT PLAYED - Republicans claimed some credit for making technical fixes to the pay-roll tax cut deal to make it easier on accounting departments and prevent anyone from gaming the system should rates jump back to 6.2 percent in March. Fair enough. But let’s be honest, the House GOP got crushed as it seemed obvious to just about everyone they would from the moment they blocked a Senate deal that passed 89-10.

It helped none at all that Republicans couched their opposition (which was really about losing other stuff they wanted in the Senate bill) on the fairly ludicrous grounds that they suddenly had to have a full-year extension of a tax cut many of them strongly opposed. It remains unclear to M.M. just what they hoped to gain through all this but that’s a question for another time. Online headlines tell to the tale of winners and losers.

HuffPo, over photo of Boehner/Cantor: “UNCLE... House GOP Caves on Payroll Taxes”

Reuters: “Boehner surrenders in tax showdown”

Chicago Tribune: “House GOP leaders yield on payroll tax”

Arkansas Democrat-Gazette: “House leaders accept Senate tax terms”

Miami Herald: “Last-minute shoppers not likely to find bargains.” (Got ya! That one is not about Congress. Or we don’t THINK it is).

DEM MIND-MELD: LONG TERM IMPACT? - From a top strategist who called this thing exactly right from day one, helping M.M. look way smarter than we actually are: “Textbook use of the bully pulpit [by Obama]. ... Boehner's inability to reign in his caucus has major implications for the coming campaign, particularly if Romney is the nominee ... he'll have a difficult time tacking to the center with the tea partiers constantly tugging at his right leg. None of this is going unnoticed among Dem strategists, who are approaching irrational exuberance over the current frame (which will change many times over the course of the New Year).”

THE DAVE CAMP FIX - From a House Ways and Means spokeswoman: “The new House bill corrects [a] critical flaw in the Senate provision by allowing employers to withhold employee payroll taxes at the reduced rate (4.2 percent) on all wages paid during the two-month period, subject only to the full 2012 wage base ($110,100) and without regard to the new $18,350 cap on wages earned through the end of February. ... As a result of this modification to the Senate’s approach, employers would not have to comply with an unnecessary new burden and could instead devote their resources toward hiring new workers or increasing wages”

2012 PREDICTIONS - We asked for them on the Twitters and got ... just two! So both fine people get their names in lights:

Thomas King, @tking242: “2012 Potus general election so close in Nov, goes to the House”

M.M. 2012 CALLS - No change in our view that Romney wins the GOP nomination. He’s had some scares but remains the strong favorite. Ron Paul, even if he wins Iowa, is not likely to go any further. Newt Gingrich has too much baggage and has taken too much of a beating on air in Iowa. And if he were to somehow knock off Romney, the GOP would probably start looking elsewhere. But he has had a much stronger run than M.M. thought he would.

As for the general? Who knows! It’s going to be close. If economic data continue to improve rapidly, Obama has a slight edge. If we muddle along with slow growth around 2 percent, which seems likely, it’s dead-even money. If we start breaking bad again (possible with Europe, housing drag, fiscal policy tightening, slowing China, tapped out consumers etc.), Romney has the small edge. Hard to see major changes in party alignment in Congress right now but it’s WAAAY too soon to make that call. ...

As for the Super Bowl? Packers over Ravens, who take out New England in the AFC title game. Packers over 49’ers in the throw-back NFC title game.

Best Picture: That black and white movie. Or the one about Matt Damon and the zoo (kidding).

Most underrated movie ever: Elf. (h/t Kevin Madden)

THE NARRATIVE - POLITICO’s Jonathan Allen, Seung Min Kim and Scott Wong: “House Republicans caved to President Barack Obama’s demand for a two-month payroll tax cut extension, ending an impasse that threatened to raise taxes on millions of Americans on Jan. 1. The capitulation came fast Thursday afternoon as House Republicans found themselves increasingly isolated in insisting that a full one-year extension was the only solution to the year-end crisis. ... In announcing the deal ... Boehner said Republicans had won new provisions that would protect businesses from certain payroll reporting requirements.

“Republicans also got Democrats to agree to accelerate the meeting of a joint House-Senate conference committee to negotiate a full-year deal. ... The pre-Christmas breakthrough marks a major moment in Obama’s relationship with the Republican House — Obama had come under fire from Democrats for conceding too much too soon throughout the year, but on this deal he’s getting exactly what he wants. ‘This is good news, just in time for the holidays,’ Obama said in a statement, noting that the tax cut would work out to about $1,000 for the average household.” http://bit.ly/tIQkix

RARE BOEHNER/McCONNELL SPLIT - WSJ’s Janet Hook and Laura Meckler on pg. A1: “The impasse was a rare split between the two Republican leaders, who for most of this year have worked hand in glove to battle ... Obama. The split reflects, in part, the pressure Mr. Boehner faces from the GOP's tea-party faction, compared with Mr. McConnell, who is more willing to accept tactical victories. Mr. Boehner's leadership within his own caucus may suffer new strains from the retreat, the latest in a string of tussles he has had with rank-and-file members this year on issues ranging from government funding to the debt ceiling.” http://on.wsj.com/u9hE8k

HASTY RETREAT - NYT’s Jennifer Steinhauer on pg. A1: “Bowing under intense pressure ... House Republican leaders agreed ... to accept a temporary extension ... beating a hasty retreat from a showdown that Republicans increasingly saw as a threat to their election opportunities next year. ... House Republicans — who rejected an almost identical deal on Tuesday — collapsed under the political rubble that has accumulated over the week, much of it from their own party, worried that the blockade would do serious damage to their appeal to voters. ... Boehner, determined to put the issue behind his party, announced the decision over the phone to members on Thursday, and did not permit the usual back and forth that is common on such calls, enraging many of them. ... In the end, the agreement seemed a clear victory for Mr. Obama and the Democrats http://nyti.ms/vo721v

ON THE ROAD TO 2012 -

ROMNEY BATTLE TESTED? - POLITICO’s John F. Harris and James Hohmann: “Here is one way to look at Mitt Romney’s challenge from Newt Gingrich: As one more humiliation delivered by Republican activists who have made clear over and over that they would really, really prefer to fall in love with someone, anyone, whose name is not Mitt Romney. But, according to many veterans of past presidential campaigns, there is another way of looking at the situation: As potentially the best thing that could happen to Romney.

“This is a prize that most operatives believe is still more likely to go to Romney than Gingrich or anyone else. And it is a prize that many believe will be worth more if it is won after a real fight. ... ‘All of us who want to go to heaven have to experience the long dark night of the soul. Everyone who goes to the White House has to live through a near-death experience,’ said Paul Begala, who helped engineer Bill Clinton’s 1992 comeback.” http://bit.ly/vXg6YO

GINGRICH ROASTED ON IOWA AIR - LATimes’ Robin Abcarian and Seema Mehta: “With no snow on the ground in this unseasonably warm state, the only blizzard Iowans are facing is the daily onslaught of negative political ads ... And the primary victim is Gingrich, who became the whipping boy of the Republican presidential field as soon as he surged to the front of the pack last month. Gingrich's considerably long record and messy personal life have made him a juicy target. Now, his commanding lead has shrunk and he is clumped at the top of the polls with ... Romney ... and Paul ... In one 30-minute period Wednesday evening, it was possible to see half a dozen political spots — either by candidates or super PACS — mostly negative. An ad for Paul accused Gingrich of ‘serial hypocrisy,’ and an ad by Texas Gov. Rick Perry claimed Gingrich ‘got rich’ through ties to Freddie Mac.” http://lat.ms/sC6gvr

ALSO FOR YOUR RADAR -

FED MAY SIGNAL LOW RATES TO 2014 - WSJ’s Luca di Leo and Jon Hilsenrath: “The Federal Reserve could signal it is likely to keep short-term interest rates near zero into 2014 or beyond, to bolster the fragile economic recovery. Fed officials have grown increasingly uncomfortable with their August statement that they are likely to hold short-term rates exceptionally low at least through mid-2013. Some believe low inflation and high unemployment could warrant low rates for longer. ... Officials could agree at their next policy meeting Jan. 24-25 to a broad revamp of their communications.” http://on.wsj.com/uZtJ1K

WHY SCHWARZMAN LIKES ROMNEY - Bloomberg’s indomitable Hans Nichols: “Wall Street magnate Stephen Schwarzman, when asked why he is supporting Republican Mitt Romney for president, had a simple response: profit. ‘We ended up making 24 times our money’ from a joint investment, Schwarzman said in a Nov. 30 Bloomberg Television interview, explaining a fundraiser he was planning for the presidential contender ... Democrats plan to focus on that friendship. In 1988, Schwarzman’s Blackstone Group invited Romney’s private equity company to invest in Transtar Inc., a holding company for rail and barge subsidiaries ...

Romney’s Bain Capital LLC became a minority and ‘completely passive’ investor, said Geoffrey Rehnert, a former Bain executive. Bain made a $13.3 million profit before it eventually sold its stake. Transtar dismissed hundreds of employees during the 1990s in the Midwest, as the U.S. steel industry was battered by international competition and the domestic rail business adjusted to regulatory changes. Blackstone spokesman Peter Rose defended the firm’s business practices, saying its portfolio of companies exceeded the national average by increasing their employment by 3 percent in 2010.” http://bloom.bg/u4NEyS

TRANSITIONS: NATONKSI BACK TO HILL - Per email from U.S. Chamber super star Dave Natonski: “I’ll be starting the new year with a new position in an old office - I’ll be returning to Congressman Aaron Schock’s organization as his Deputy Chief of Staff, where I’ll be managing the day-to-day operations in his DC office; improving coalition outreach; and strengthening his communications team. As excited as I am to come back to the Hill and to rejoin such a strong office, it’s incredibly bittersweet to be leaving the best communications shop in all of DC. Over the past year, I’ve learned so much from Tom, JP, Blair, Bryan, Bobby, Sara, and Tita and I’ll miss them (and the entire 2nd floor) very much.”

LAWMAKERS SAY DELAY VOLKER - Bloomberg’s Phil Mattingly: “A bipartisan group of 121 U.S. House lawmakers asked federal regulators to slow the adoption of the so-called Volcker rule that aims to ban banks from proprietary trading. Representative Randy Neugebauer, a Texas Republican and subcommittee chairman on the Financial Services Committee, led 117 Republicans and four Democrats who requested an extension of the comment period for the rule ... The regulators are taking public comments until Jan. 13. Numerous questions have been raised about the proposal, as drafted, that must be carefully examined given the potential impact on capital formation for American businesses and a broader U.S. economic recovery,’ lawmakers wrote in the letter dated Dec. 20.”

BYE FOR NOW - And thank you for reading. It is as, as ever, an honor and privilege to serve you. Look forward to a dazzling 2012. Now go make that flight!

** A message from the Independent Community Bankers of America: The first U.S. community banks were formed in the wake of the American Revolution to stabilize the nation’s postwar finances. By providing loans to entrepreneurs and developers, these community banks were soon stimulating economic growth and financing the rise of the world’s greatest democracy. Their legacy of relationship banking and local economic and job growth continues to this day, with more than 2,500 of the nation’s community banks in business for more than 100 years and the oldest dating to the presidency of John Adams. Today serving communities in every congressional district, community bankers nationwide urge Congress to advance tailored banking regulations that will allow these job creators to continue supporting local economic growth for decades to come. www.icba.org/aboutus **

Authors:

About The Author

Ben White is POLITICO Pro's chief economic correspondent and author of the “Morning Money” column covering the nexus of finance and public policy.

Prior to joining POLITICO in the fall of 2009, Mr. White served as a Wall Street reporter for the New York Times, where he shared a Society of Business Editors and Writers award for breaking news coverage of the financial crisis.

From 2005 to 2007, White was Wall Street correspondent and U.S. Banking Editor at the Financial Times.

White worked at the Washington Post for nine years before joining the FT. He served as national political researcher and research assistant to columnist David S. Broder and later as Wall Street correspondent.

White, a 1994 graduate of Kenyon College, has two sons and lives in New York City.